June 172003

Submitted by webadmin on Tue, 2003-06-17 00:00

June 17, 2003

Family Farmer Bankruptcy Relief Act of 2003 Introduced in the
House

House Judiciary Committee Chairman James Sensenbrenner (R-Wis.)
introduced last Thursday the Family Farmer Bankruptcy Relief Act of
2003, H.R. 2465, to extend for six months the period for which
chapter 12 of title 11 of the U.S. Code is reenacted. Chapter 12, the
only temporary chapter in the U.S. Bankruptcy Code, is due to expire on
July 1 if it is not extended. President Bush signed P.L. 107-377 on Dec.
19, giving farmers who file for bankruptcy an extra six months of
special protection. This was the fifth temporary extension of the law,
first enacted in 1986. About 800 to 1,100 farmers file for chapter 12
bankruptcy protection each year. A provision in H.R. 975, passed by the
House in March, would expand the law's coverage and make it
permanent.

Separately, the Wall Street Journal reported that the U.S.
agriculture sector is showing the strongest signs yet of a revival. In
addition, federal subsidy checks to farmers are slated to nearly double
this year to $21.4 billion under the farm-aid law signed by President
Bush last year. As a result, the Agriculture Department this month
predicted that net farm income will hit $46.2 billion this year, up 53
percent from 2002, when it was at the lowest point since the mid-1980s
farm crisis, reported the newspaper.

Loan Costs Would Rise Without Federal Pre-emption: Study

If the federal pre-emption of several elements of the Fair Credit
Reporting Act (FCRA) were allowed to lapse at the end of this year, the
cost of mortgages and rates on credit card loans would increase,
according to a 120-page
href='http://www.infopolicy.org/pdf/fcra_report.pdf'>study released
today by the U.S. Chamber of Commerce's National Chamber Foundation,
CongressDaily reported. The study said that the rising costs were
attributable to three key developments in credit markets that would be
lost if the pre-emption lapsed: automated underwriting; uniform national
standards governing complete credit files; and pre-screening, when
credit card companies extend credit without an individual applying for
it. 'If the framework of pre-emption created in 1996 is permitted to
sunset, it is likely that the benefits arising from automated
underwriting would be placed at risk,' reads the study, prepared for the
foundation by the Information Policy Institute, reported the
newswire.

Weirton Steel Wins Bankruptcy Judge's Approval of $225 Million
Loan

Weirton Steel Corp. won court approval for a $225 million bankruptcy
loan, about three quarters of which it will use to pay existing debts,
Bloomberg News reported. U.S. Bankruptcy Judge L. Edward Friend II
approved the loan at a hearing in Wheeling, W. Va., brushing aside
opposition from creditors such as U.S. Steel Corp. Friend last month
ruled that Weirton can use $161 million from its financing to pay off a
$200 million loan incurred before bankruptcy. Employee-owned Weirton
filed last month for chapter 11 bankruptcy protection to cope with more
than $1.4 billion in debts and three straight unprofitable years.
Growing labor and retiree costs and a flood of below-cost foreign steel
into the U.S. market has helped drive more than three-dozen steelmakers
into bankruptcy over the past five years, reported the newswire.

U.S. Supreme Court to Clarify Bankruptcy Debt Interest
Rate

The U.S. Supreme Court will clarify how much interest secured creditors
can charge on debts in some personal-bankruptcy reorganizations,
Bloomberg News reported. The court agreed to hear an Indiana couple's
argument that a lender shouldn't be allowed to charge 21 percent
interest on the loan for their truck as part of their chapter 13
bankruptcy reorganization plan.

A federal appeals court said Mishawaka, Ind.-based SCS Credit Corp.
was entitled to the 21 percent interest it would get if it were issuing
a new loan. Some appeals courts have agreed with that approach, while
other courts have used a method that results in a lower interest rate.
Allowing the higher interest rate means 'overreaching creditors stand to
profit immensely at the expense of unsecured creditors and the typical
chapter 13 debtor struggling to protect a family's most basic
necessities,'' lawyers for Lee and Amy Till said in court papers filed
in Washington, D.C. The Tills filed for bankruptcy in 1999 to reorganize
their personal debts, including a $6,425 loan for their truck from SCS
Credit. The amount of the loan was reduced to $4,000 in their
reorganization plan, and the Tills sought to pay 9.5 percent interest on
that amount, reported the newswire.

SCS Credit objected, saying it should be allowed to charge the same
21 percent as in the original loan contract. A bankruptcy judge ruled
for the Tills, while the Chicago-based 7th U.S. Circuit Court of Appeals
let the company charge its original loan rate, Bloomberg reported.

Kmart's Net Loss Narrows, While Sales Drop by 3.2 Percent

Kmart Corp. posted a sharply narrower loss for its fiscal first quarter,
but the report -- the retailer's first since emerging from bankruptcy
protection -- showed that reorganization costs continue to be a heavy
burden, the Wall Street Journal reported. The Troy, Mich.-based
discount chain reported a net loss of $862 million, or $1.65 a share,
compared with a loss of $1.44 billion, or $2.87 a share, a year earlier.
The company said its loss before $769 million in reorganization
expenses, as well as smaller items for interest, income taxes and
discontinued operations, was $32 million, which it compared with a
year-earlier loss of $920 million. Last year's fiscal first quarter
included a charge of $542 million to cover the cost of store-closing
liquidation sales, reported the online newspaper.

Drug Co. Deltagen May Seek Bankruptcy

Drug developer Deltagen Inc. on Monday said it lacks funds to pay down a
$5 million loan and may seek bankruptcy protection. It also said both
its interim chief executive and chief financial officers resigned,
Reuters reported. The Redwood City, Calif.-based company, which has
fired workers and eliminated facilities to save money, said it is 'very
unlikely' it will to close the second piece of a bridge loan and series
A preferred stock financing. As a result, it said it does not expect to
have enough funds to pay down a $5 million bridge loan maturing on July
1. Deltagen also said the role of chairman of its board of directors
will be rotated among Deltagen's four directors. The board 'is exploring
the company's strategic options, including alternate financing or
bankruptcy,' it said, reported the newswire.

MCSi Gets Court Approval for $10 Million DIP Financing

MCSi Inc. announced yesterday in a press release distributed by Business
Wire that it received interim approval from the bankruptcy court for $10
million in new financing through a DIP financing facility provided by
certain of its existing lenders. Pursuant to the court's order, $5
million (including $2.5 million for letters of credit) will be
immediately available under the facility, with access to the remaining
$5 million subject to final court approval of the facility, which is
scheduled for July 9, 2003. As part of the approval of the DIP facility,
the company finalized its cash collateral arrangements previously agreed
to by its existing lenders.

Oglebay Norton Receives Extension of Waiver for Senior Bank Debt
Covenants

Oglebay Norton Company announced yesterday in a press release
distributed by PR Newswire that it has extended the waiver from its bank
group for certain covenants of its senior secured bank loan agreements.
The waiver extension resets all covenant restrictions through Aug. 15,
2003. The company is in discussions with its senior bank group and its
senior secured note holder group on longer-term amendments to the
various lending agreements. The Cleveland, Ohio-based company provides
essential minerals and aggregates to a broad range of markets, from
building materials and home improvement to the environmental, energy and
metallurgical industries.

Lehman Must Pay $5 Million to First Alliance Borrowers, Jury
Says

Lehman Brothers Holdings Inc. aided and abetted fraud when it helped
finance a mortgage lender that allegedly cheated borrowers and should
pay $5 million, a federal court jury decided, Bloomberg News reported.
The 10-person jury in Santa Ana, Calif., found that Lehman knowingly
helped First Alliance Corp., which is accused by borrowers of charging
excessive fees to customers with credit problems of charging and
concealing information.

The trial is believed to be the first court test of a securities firm
accused of aiding and abetting fraud for doing business with an alleged
predatory lender. The jury found that Lehman was 10 percent responsible
for the fraud, and assigned the majority of the responsibility to
bankrupt First Alliance, reported the newswire.

Conseco Sees Enough Votes For Amended Reorganization Plan

A judge on Friday heard the first day of arguments on Conseco Inc.'s
reorganization plan, though the hearing almost didn't happen after the
company disclosed it didn't get enough creditor votes for the plan even
to be considered. Conseco attorney James H.M. Sprayregen at the start of
the proceedings immediately asked Judge Carol A. Doyle of the U.S.
Bankruptcy Court in Chicago to adjourn the proceedings so that the
company could continue to negotiate with one debt holder about changing
its vote. Attorneys and executives then spent about 45 minutes huddled
in courtroom hallways and talking into their cellphone earpieces.

ANC Plans to Sell Alamo, National Car-rental Units

ANC Rental Corp. agreed to sell its Alamo and National units to a
private investment group for $230 million, the Wall Street
Journal reported. The Fort Lauderdale, Fla.-based concern, which has
been operating under chapter 11 bankruptcy-court protection since 2001,
said Cerberus Capital Management LP also will assume more than $2
billion in debt secured by rental cars and other current liabilities and
$60 million in nonvehicle debt. The deal also includes $150 million in
net working capital. A federal bankruptcy-court judge in Delaware would
have to approve the sale following an auction process, which could
attract new bidders. ANC, which has been seeking a buyer since January,
will ask the bankruptcy court to approve the sale by Aug. 6, reported
the newswire.

WorldCom Revenue Slips in April

WorldCom on Tuesday said its revenue in April slipped but operating
revenue rose when compared to the previous month, Reuters reported.
WorldCom said revenue in April totaled $2.05 billion, down 2.4 percent
from $2.10 billion the previous month. Its operating income for the
month rose to $114 million in April, up 36 percent from $84 million
reported in March. The Ashburn, Va.-based company said once it emerges
from bankruptcy, its existing WorldCom and Intermedia preferred stock
and WorldCom Group and MCI group tracking stock issues will have no
value.

Engage to Seek Chapter 11, Sale of All Assets

Engage Inc., a provider of online advertising and marketing services, on
Tuesday said it is insolvent, plans to file for chapter 11 bankruptcy
protection, and is in the final stages of talks to sell substantially
all of its assets to a third party, Reuters reported. The Andover,
Mass.-based company said the bankruptcy petition would also cover
several U.S. units. Engage said an asset sale would require bankruptcy
court approval as well as the consent of technology company CMGI Inc.,
which is also based in Andover.

Engage said if it fails to complete restructuring talks, which would
encompass the bankruptcy filing, and obtain CMGI's consent, then it
intends to liquidate. If it reorganizes or liquidates, 'it is unlikely'
that shareholders will recover anything for their holdings, it said,
reported the newswire.

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